Friday, March 25, 2011
Most agreed that commercial real estate values are on the upswing. However, the improvements are being driven more by compressed cap rates than by
increasing cash flow. Additionally, servicers are increasingly turning to
loan modifications with increased success.
In contrast, much of the market pessimism centers on the amount of loans in
special servicing. While new transfers into special servicing have slowed,
the inventory of assets to work through is large. Approximately $89.7
billion of loans are in special servicing as year end-2010 (YE’10),
compared to $73.9 billion at YE’09.
New issuance is seen as a positive sign to help temper the volume of loans
entering special servicing. However, the burgeoning trend is also of
concern among investors who are wary of competitive pressures weakening
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